Some Good Friday reads for those of you looking for something else to do:

• S&P High Is a Show of Faith in Fed (WSJ)
• Passive investing: If it’s good enough for CalPERS (Investment News) see also Don’t Do It, CalPERS! (Dealbreaker)
• Hoenig: Stop subsidizing Wall Street (Washington Post)
• Simon Johnson: The Debate on Bank Size Is Over (Economix) but see The White House’s dangerous stance on ‘too big to fail’ (Washington Post)
• Profiles of the World’s Best CEOs — Many Paths to Greatness (Barron’s)
• Weil: Betray Your Bank Before Your Bank Betrays You (Bloomberg) see also Controls on Capital Come Late to Cyprus (NYT)
• Long Night at Today (New York Mag)
• China Attack: Apple slammed by China Central TV & Communist Party mouthpiece People’s Daily (WSJ) see also Japan’s Investors Are GungHo for iPhone Game (WSJ)
• Your Client’s Brain: Coping as Your Clients Age (AdvisorOne)
• The Science of Monsters (The Telegraph)

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

28 Responses to “10 Friday AM Reads”

About 3 weeks ago, asked a rep of my brokerge if any European money was entering and help inflate the US markets. Answer: most money is going into FDIC insured deposit accounts at their related bank. I don’t know how I feel about US extending FDIC insurance to foreign depositors. Given the slowing velocity, it seems a negative.

the new stimulus package: overachievers are popping psychostimulants to get ahead. is that a good idea? http://slate.me/WYVz7W
“in the past decade or so, psychostimulants like Adderall have exploded in popularity among people without an diagnosis or prescription. Studies indicate that as many as one in three students on major college campuses have used ADHD medications illicitly, most commonly as a study aid. The insatiable demand has led to shortages at pharmacies across the country.”

9-year-old ponders the universe, the meaning of life http://n.pr/Zrmypr
from the dread comments: “My boy was just like this when he was 7, 8 or 9. He amazed us all the time with insights. Now he’s 15 and he’s trying to figure out 9th grade instead of the universe. I think 9th grade might be harder.”

Interesting … while median household income declined 1.1% in February, personal income increased by 1.1% in the same month. I suppose this reflects the difference between the “median” and the “total”, and is a sign of our increasing economic inequality …

The real world works on Good Friday in the US. Pretty much only government employees and the financial sector have the day off.

Here is an interesting article on money market funds. A couple of weeks ago, I posted that there are still two bubbles out there: TBTF banks and income/wealth inequality. I would add one more bubble: assumed or implied guarantees of unguaranteed things.

We are seeing it in Cyprus where people are shocked to find out that uninsured deposits above the insured limits may actually be uninsured. Money markets will fall into the same category. They are just ultra short bond funds but there is still risk that you won’t get all of your principal back 30 or 60 days from now on an issue, so why would anyone assume that they are the same level of principal guarantee is an FDIC insured savings account? Breaking the buck occasionally should be viewed as a feature, not a bug, as it is how you can get that extra 1% interest rate above your Treasuring bill or FDIC account. If you don’t want the buck broken, then you invest in a 30 day-T-bill money market account instead of a corporate bond money market.

Our financial system won’t be back to normal until people realize that there is no guarantee of anything unless it is an FDIC-insured account below the insured limits. At that point, people should be reviewing safety, risk, promised returns etc. and coming to rational purchasing and investing decisions. We need to move beyond our current nanny-state where people assume that some Big Brother out there will make sure they are whole on risky things or that the snake oil salesmen are really selling snake oil. There should be no free lunches for anybody, including the CEOs of TBTF banks.

The housing market will do fine. It is the high wealth investors that are buying the houses, not median income people. The investors are buying the houses to rent to the median income people since they can’t afford to actually buy a house anymore.

“When I talk to my friends in the Obama administration, they defend themselves and the long-term macroeconomic outcome in the US by pointing out that the rest of the developed world is doing far worse. They are correct. Europe wishes desperately that it had America’s problems.

Nevertheless, my conclusion is that I should stop calling the current episode the Lesser Depression. Yes, its shape is different from that of the Great Depression; but, so far at least, there is no reason to rank it any lower in the hierarchy of macroeconomic disasters.”

Me: True enough but that “different shape than the Great Depression” presents investors (and analysis generally) with some conundrums; for example,

“… data on corporate profitability for 2012 show the continuation of historic levels of profitability despite excessive unemployment and stagnant wages for most workers. Specifically, the share of capital income (such as profits and interest, which are hereafter referred to as ‘profits’) in the corporate sector increased to 25.6 percent in 2012, the highest in any year since 1950-1951 and far higher than the 19.9 percent share prevailing over 1969-2007, …”

Me again: The preponderance of evidence suggests unemployment is still more cyclical (demand gap) than structural but the evidence also suggests it is becoming more structural, in part because of the opportunity cost of obeying deficit scolds, but this does not explain the conundrum, only why it is more painful …

OK so I see the last downward ‘blip’ in a downward tending data in the chart. So how will the housing sector improve with this data? Seems like buying a house is a fools move.
I have even read where car buying has improved. Why? The data may be true, but what posses one to throw dwindling income on a new car. Seems like a mass transit ticket is a better investment.
There has to be more information behind this curve and its implication.

Blue Sky Thinking
The entirely serious plan to collect solar energy by spaceship and beam it back to Earth with lasers
By Jeffrey Ball
Posted Tuesday, March 26, 2013

One of the world’s most ambitious plans for harvesting clean energy is largely stuck in the lab, despite decades of work and tens of millions of dollars in research spending. It faces many barriers, but one is particularly vexing: the giggle factor. Many people who hear the idea think it’s loony.

The concept, delicious in its brashness, brings to mind an early James Bond flick: shoot big pieces of solar-panel arrays into space, assemble them in orbit into massive power plants that are miles wide, let the floating facilities collect space’s intense sunlight and convert it into electricity, and then beam that extraterrestrial juice–ray-gun-style–back down to an energy-hungry Earth.

As with many alluring energy technologies, the hurdle doesn’t appear to be the underlying science. Panels on rooftops already turn solar energy into electricity, and several experiments have transmitted electricity through the air. The impediments are scale, which would need to balloon, and cost, which would need to plummet. Given the world’s vast energy needs, harnessing meaningful amounts of solar power from space would require shooting solar-array components into orbit multiple times a day, over years, some studies suggest. And it would cost tens of billions of dollars.

Phil Chapman, a former NASA astronaut, is a longtime space-solar proponent.

Scientist now have a very strong mechanistic model to explain how excessive salt could induce inflammation and autoimmune diseases.

I find this very interesting. A lot of inflammation related (obesity, diabetes, hypertension) or outright autoimmune diseases have seen a drastic increase in frequency the past few generations. This is also a time period where we have seen a drastic increase in salt intake. The food industry became more and more sophisticated in its ability to add substances that got us hooked on their products (you know those chips that you just cannot put down – no accident, but a deliberate ploy created from years of research). One of those toxic and addictive substances that they add to your food is salt. They might as well have lazed it with cocaine, but for some reason that would have been illegal, whereas other additives similarly addictive and destructive to your health are fully legal. And as any other street pusher their excuse is that people want it and they know what it is – though for food that would be a little harder to accept given that kids who can’t read are filled with this poison.

Well at least from now on when the hard has been clearly demonstrated, lawyers will be salivating as this type of food is distributed – and not just because they are also hooked.

@DeDude, Re Salt:
Typically, we think of salt as Sodium Chloride. Salt with some (or all) Potassium Chloride is also available. Do you know of any work that examines that kind of salt (as opposed to that which is 100% NaCl? Tx.

I don’t think it ever ended in much of the drought areas. River levels, Great Lakes levels, and groundwater levels are still low. The lack of evapo-tranpiration over the winter may provide some shallow soil moisture but that can vanish in a couple of dry, hot weeks.

​“…there’s considerable disagreement among sociologists as to what the consequences of raising a child in a single-sex family, whether that is harmful to the child or not.” – US Supreme Court Judge Scalia.

Just making stuff up off the top of his head. The Reagan Myth lives on!

Voting has Consequences, GOP voter. Thanks for being an unscientific buffoon, GOP Voter.

@EDF; It is the sodium chloride (NaCl) that is being added to our food in large amounts that the recent studies about autoimmunity were using. Potassium chloride (KCl) has been linked to activation of inflammation, but it is not present in excess in our food. I am not familiar with the effects of potassium chloride on inflammation and autoimmunity. You can search the subject at the PubMed database (http://www.ncbi.nlm.nih.gov/pubmed/) and see f.eks. this original research article from china (http://www.ncbi.nlm.nih.gov/pubmed/23138560) suggesting that potassium channels (which bring it into the cells are important for activation of inflammatory cells called macrophages. Another paper suggests that autoimmunity can be improved by targetting these channels (http://www.ncbi.nlm.nih.gov/pubmed/23353639). In both cases the issue is more one of potential therapeutic targets rather than one of excessive intake as the cause of rising rates of disease.

thinking that the only real way to keep the banks from taking us down, when we next have to bail them out (and they will of course force us to do just that. cause more than a few have just deposits that are 1/15 of the GDP. so failure isn’t really an option. and they will think they are safe because they have a shotgun to our heads. and they aren’t really bright). but nationalization is. to get their bailout, we nationalize them and break them up, the only safe money in this is insured deposits, every thing else is toast.

> The food industry became more and more sophisticated in its ability to add substances that got us hooked on their products

It is supremely ironic – or perhaps perverse – that we have entire industries devoted to getting us hooked on food and drink that makes us more and more unhealthy as we grow older, and entirely industries devoted to trying to address the medical consequences of all this later in life.

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Ritholtz has been observing capital markets with a critical eye for 20 years. With a background in math & sciences and a law school degree, he is not your typical Wall St. persona. He left Law for Finance, working as a trader, researcher and strategist before graduating to asset managementRead More...

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